Is it legal to deduct up to one-hour of pay for tardiness?
a) Is one hour the maximum time that can be deducted?
b) How many tardies should trigger the reduction in pay?
c) How should a "Company Handbook Tardiness Policy" be written to address deduction in pay if an employee is tardy without any excuse except oversleeping or his car will not start.


  • 34 Comments sorted by Votes Date Added
  • You don't have to pay employees if they are not working. But if they are working (even if they are late), they must be paid for the time worked.

    Now, you could suspend the employee without pay for having too many lates. Or just start progressive discipline (oral warning, written warning, etc).

    But not paying the employee for time worked causes all sorts of wage and hour problems.

    Good Luck!
  • You get into some pretty tricky areas when you deduct pay from an exempt employee for any reason (other than if the employee legitimately owes the company money, and even then... you should get a memo signed by them before you do that). When you do dock pay, you are treating them as a non-exempt employee and that opens up a BIG can of worms.

    Tardiness by exempt employees should strictly be treated as a discplinary issue.
    With non-exempt, you are only obligated to pay them for their time worked.
  • In our employee handbook it is spelled out quite specific. If an employee is late 21 minutes or longer that employee is written-up. The second late in a 90 day span the employee will have a 2 week 10% disciplinary reduction in pay, 3rd late in a 90 day span the emplyee will have a 4 week 10% disciplinary reduction in pay. The reduction in pay includes holiday, vacation, and over-time. If an employee is late 4 times within the 90 days of his/her 1st late , that employee will be terminated.
  • Does this not create a problem with minimum wage? Are you deducting from hourly wage or the ee hours? At our plant by deducting 10% of the wages that could possibly put a new hire under the min wage.

  • We do not have any employees that make minimum wage. The employees wages range from $15.00 to $18.50 per hour. This policy has been in place for many years and it works.
  • Cindy - Thank you for your comments to my inquery about absenteeism. Would it be possible for you to share the writing of your Handbook policy with me?
  • Yes it is wrong, you can not deduct money from anyone's pay. You must pay the employee for every minute worked; however, you may round up or down depending on how your payroll system works. Where possible, I would pay the ee for every minute clocked in and out. Our system pays by the quarter hour, therefore we round to the nearest quarter hour. We never dock a person for being late! The manager is expected to provide written guidance to the ee for these situations, but the manager never has the authority to financially punish an ee for lateness. The manager can terminate or discipline based on his/her history of handling similar cases. Glad to be of service. Pork
  • The policy that is in place like I said earlier has been in place for many years and we do reduce employees pay. It doesn't happen to often but we do reduce employees pay. Employees are fully aware of this policy. Let me explain : We reduce employees pay by 10%. We do not deduct. Deducting is illegal and reduce is legal. Sorry that I stated that wrong earlier.

  • Cindy, I think it is a matter of semantics with the end result being the same; the employee is having wages taken out of his/her paycheck. Because a policy has been in place for a long time does not necessarily mean that it is legal. I agree with Theresa that employees must be paid for all work done. Tardiness should be addressed through a progressive disciplinary process and not by taking pay away from them. You might want to consider seeking legal counsel regarding your practice.
  • I can't believe that this policy has not caused you problems over the years. A union could have a field day over this one.

    If I understand you correctly, an employee who is late will have his pay reduced 10% (instead of $15/hour his rate would be $13.50/hour) for a 2-week period. That is a "fine" of $120 over a 2-week span. The "fine" is even greater as the "discipline" process goes to 4 weeks, etc. That would pay an awful lot of union dues.

    I believe that I would rethink that policy and go with a progressive discipline process that involves written warnings, suspension, then termination. A suspension without pay at the end stage would cost the employee about the same as the 2-week pay reduction ($15/hour X 8 hours/day = $120).
  • I love HRhero. It's amazing what comes out of the woodwork. Cindy, these folks speak the truth. You would do well to check your State laws regarding wages. I don't know where your company is located, but the so-called "reduction" practice you described would be flat-out illegal here in PA. It would worth your while to check because a DOL audit and the subsequent fines could be enormous.
  • The DOL will hit you big time for this! DOL is quite specific that employees must be paid for all hours worked. This "deduction" comes from hours worked and the DOL doesn't care if it's for a disciplinary or what. They will see it as you are not paying the employee for hours they worked.

    When an employee lodges a complaint (and it will only be a matter of time) this will trigger an audit and depending upon how long you have had this policy and how many people it has affected, you could be liable for a huge amount of money. They can go back 2 -3 years and if they find it a willful violation on the part of the employer, a fine will be in order.

    It would be much better to put a disciplinary process in place that would not affect pay in any respect. Verbal, written, suspension,termination - if you want to structure your discipline in a progressive fashion, you could do it this way.

    I've always had a strict "hands off" policy when it comes to tampering with an hourly employee's salary or a salaried person's time.

  • I just want to clarify this...I can reduce a salary person's wage and an hourly person's hours to reduce costs correct. But I can't do the opposite.

  • We have seeked legal advice and it is perfectly legal so long as the employee is not exempt and so long as an employee is not working on a government project-pay scale comes into affect at that time.
  • It's like a temporary demotion???
  • It is not a demotion. The purpose is for discipline. We are a Ready Mix Company that deals with construction. We are a service orientated company that has to have our employees in on time every day they are scheduled to work. Our customers/contractors depend on us to be at the job site on time each and every day. This type of discipline works well for us. It is not for every type of business. It is legal in Wisconsin, might not be in your state.

  • Cindy, what your company is doing is most certainly not legal. Chapter 109 of the Wisconsin Statutes expressly forbids companies from doing what you have described. I copied the quote below from the Wisconsin Department of Workforce Development website.

    - Deductions from Wages for Loss, Theft, Damage or Poor Workmanship
    Employers may only make deductions from the wages of an employee for loss, theft, damage or faulty
    workmanship under one of the following conditions.
    The employee may authorize the deduction, in writing, after the problem occurs and before the deduction is
    A representative of the employee may determine that the employee was at fault and that the deduction may
    be made or the employee may be found guilty or held liable in a court of competent jurisdiction.
    An employer who makes a deduction without following one of these procedures may be held liable for twice
    the amount of the deduction. Blanket authorizations are not valid. The employee’s written permission must be
    obtained after each occurrence of a problem.

  • We are not deducting off of the employees check. What we are doing is taking 10% off of his/her wages. Which means we are reducing his/her pay. That is legal in Wisconsin. I called our lawyer just to make sure it was legal and he said it is. You have to be carefull how you word it. Yes, it is illegal to deduct off an employees check with out permission but it is not illegal to reduce pay.
  • OKAY-OKAY! Message received, zero distortion :)
  • [font size="1" color="#FF0000"]LAST EDITED ON 11-13-02 AT 12:50PM (CST)[/font][p]This seems to be going nowhere fast. Cindy, I'm afraid I have to agree with the host of others who have told you that your practice violates the law. It is perfectly legal to reclassify a job or restructure the pay of a job GOING FORWARD. But, it is not legal to punitively reduce pay or reduce the pay earned for a job worked or negatively affect a current paycheck for punitive or disciplinary reasons. I notice you say (1) this is in the handbook, and (2) has been there for a long time, and (3) it works, and (4) you're in the concrete business and service is important, and (5) you are in Wisconsin and (6) your lawyer says it's OK, just be careful how you word it. The first five are irrelevant and the sixth....get a new lawyer.
  • On the flip side it seems like a policy that reduces pay for being late or poor workmanship (even if legal) might discourage honest reporting of problems and also might turn every employee into a penny counting, minute watching, get-everything-coming-to-me, distrustful, walking morale problem.

    Plus you say its not enforced often. If its not consistently enforced and then one day you decide to enforce it and the employee happens to be in a protected class, I can't imagine how that would be a good situation.

    On the other hand, I commend you for the way you have represented yourself in this thread without becoming defensive. I'd change your policy if it was me. Our organization had a discipline policy that included pay deductions when I first started here and it was one of the first things that I changed.

  • In our policy our employees are paid by the tenth of an hour (we calculate time manually) so in essence an employee is docked the same if they are 1-5 minutes late. We have checked this out and it is legal. I don't think that it is fair to pay someone that isn't in the plant working. There must be some sort of action taken when an ee breaks the rules (ie being tardy). We are not reducing the hourly rate but we are not paying for time that the ee is not working.

    I also have to agree with Paul in that you have been a trooper in replying back to some of the responses that you have had to your question.

  • There's no reason to become defensive. I respect every ones expertise and appreciate it.

    What I said was it does'nt happen to often. Not because I'm not following through with this policy but because the employees do not want a 10% reduction in pay so therefore employees are on time. We are consistent with all policies and with all employees. We do not discriminate.

    We have good employees here. They do not walk around distrustful,get everything coming to me attitude nothing like that. All though every company does have some employee like that. Can not get away from it.

    We used to be union. The employees voted the union out. Employees are treated fairly and with respect. We have a good group of people here and that have been here for many years and understand and except the policies. We have a open door policy here. Employees know that it lies on their shoulders to be here on time and if their not they suffer the consequences. I have had 2 employees this season that I had to take a 2 week 10% disciplinary reduction in pay. There reaction was I know, it was my own fault.

    I will look into this situation further.

    Thank You for your advise, opinion, expertise
  • I just wanted to let every one know that I talked to William who is with the DOL. I asked him if it was illegal what we are doing with the 10% disciplinary reduction in pay. Willaim told me that it is not illegal that it is legal so long as the employee knows about the policy and is aware of when the reduction in pay will occur.

    We let our employees know by letter, Also when I am interviewing I let the candidates know about the policy right off the bat. It is also in our employee handbook.

    If you would like to call the DOL the number that I called was 414-227-4384.

  • Cindy, once and for all, please clarify: Do you inact the reduction on subsequent checks or is it retroactive. In other words, if I screw up bad enough, and you hand me my check for hours I have worked, do I suddenly see the reduction on that check you just gave me? Or, is my penalty that my pay is reduced going forward?
  • When a reduction in pay is enforced the employee will get a letter stating that the next pay period they will have a 2 week 10% reduction in pay. We always forewarn the employees before we reduce their pay. The employees check for the following pay period will be effected.

    The employee has a verbal warning then a written warning stating if he/she is late again there will be a 2 week 10% disciplinary reduction in pay.

    We are paid every 2 weeks.

    I hope I explained it all right.
  • Kudos to you Cindy. If your policy works, and is legal, stick to it. If most of the messages were correct, an employer could never reduce an employee's pay. Increase, OK, decrease, never. In Wisconsin, police officers have that protection, (not absolute) but not other employees.
    I, personally, like the policy. You reduce the employee's pay without granting them a unpaid 'vacation' which some employees don't mind when you get to the suspension level of discipline.

  • Aha. I finally have it. Now I see it a bit differently. All along I thought you were deducting from paychecks as a method of discipline. If they are told upfront what the policy is and that their pay may change depending on their not following policies and they acknowledge by signing for the handbook that has that language; and now I hear you say they have received several progressive notices of what's coming........go for it! I think what you have is a contract which includes the clearly stated possibility of contract modification being a consequence of behavior. I'm no more a lawyer than I am a doctor, though.
  • I'm glad we final got on the same page. Don, you made me work hard at this one. Thank you for the challenge and keeping me on my toes.

    Hunter1 this is legal in the state of Wisconsin, and it works very well with our company.
  • Thanks for making us all think, Cindy; but, it wasn't I who made you work hard on this one. It was you. I just re-read your original questions and none of them indicated the situation we finally arrived at. Have a good one.
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